You are here

Fender busted for price fixing

For all things relating to guitars, basses, amps, pedals & accessories.

Fender busted for price fixing

Postby SecretSam » Thu Jan 23, 2020 1:15 pm

The world's most boring guitar company is in trouble for rigging the market.

https://www.bbc.com/news/business-51214257

And I still haven't forgiven them for closing SWR and Hamer.
SecretSam
Frequent Poster
Posts: 1359
Joined: Tue Oct 29, 2002 1:00 am
Location: Officially, I do not exist.
Instant gratification is actually pretty good. It's fast as well.

Re: Fender busted for price fixing

Postby The Red Bladder » Thu Jan 23, 2020 1:37 pm

I like the way their PR dept. dressed it up as a procedural issue -
As a result of the investigation, we have taken additional steps to enhance our compliance procedures and our new EMEA executive team will continue to rigorously monitor the business' adherence to antitrust and competition laws.

So they were not really just cheating and leaning on retailers and threatening them with non-delivery clauses, they merely failed to monitor compliance procedure.

So that's all just peachy then!
The Red Bladder
Frequent Poster (Level2)
Posts: 2405
Joined: Tue Jun 05, 2007 12:00 am
Location: . . .
 

Re: Fender busted for price fixing

Postby The Elf » Thu Jan 23, 2020 2:14 pm

I'm sure they all do it; the crime is getting caught.
User avatar
The Elf
Jedi Poster
Posts: 13737
Joined: Tue Aug 14, 2001 12:00 am
Location: Sheffield, UK
An Eagle for an Emperor, A Kestrel for a Knave.

Re: Fender busted for price fixing

Postby Wonks » Thu Jan 23, 2020 2:28 pm

The problem is the consumer laws favour the big guys, with mainly internet sales , who already get the best price per guitar from Fender because of numbers shifted. So as I see it, Fender were really trying to support the smaller stores. There was no real benefit to Fender as they already had their money from the retailer, it was the retailer who was cutting the profit margin.

We know retail is suffering badly in this country. Whilst I do a lot of internet shopping, music equipment shopping is something I prefer to do in a shop. Favour just the big outlets and soon everything will be internet only, with no chance to try before you buy or have informed staff to talk to.
User avatar
Wonks
Jedi Poster
Posts: 10690
Joined: Thu May 29, 2003 12:00 am
Location: Reading, UK
Correcting mistakes on the internet since 1853

Re: Fender busted for price fixing

Postby rggillespie » Thu Jan 23, 2020 2:33 pm

Fender really have no shame, happy to squeeze their customers for every penny they can get. Their custom shop masterbuild guitars were 3.5k two years ago now they are 6.0k plus. Similarly their normal custom shop guitars have moved from 2.5k to just under 4.0k in two years. There's no way that can be justified, it's greed pure and simple. I'm very pleased to hear they've be caught out and fined.
rggillespie
Poster
Posts: 24
Joined: Wed Aug 29, 2018 8:24 am

Re: Fender busted for price fixing

Postby The Red Bladder » Thu Jan 23, 2020 2:43 pm

The Elf wrote:I'm sure they all do it; the crime is getting caught.
Every MI retailer knows how they play the game. It is all done with linked sales ("You must buy two of these turkeys if you want our popular models!") and with shelf-squatting ("We need you to carry the full range so that the customer has a proper choice!")

And the nastiest of all - the end-of-year rebate. A retailer's profit is on the face of it - zero. Nothing. Zip. Zilch. By the time he has shipped it, dealt with the customer and done all the other things (e.g. returns, etc., etc.) the ever-more-slender margins are gone. But come the end of the year, he gets a rebate on next year's turnover. And it can be a big rebate!

The rebate system ensures that popular brands keep the little brands off the shelves.
The Red Bladder
Frequent Poster (Level2)
Posts: 2405
Joined: Tue Jun 05, 2007 12:00 am
Location: . . .
 

Re: Fender busted for price fixing

Postby Wonks » Fri Jan 24, 2020 6:58 pm

rggillespie wrote:Fender really have no shame, happy to squeeze their customers for every penny they can get. Their custom shop masterbuild guitars where 3.5k two years ago now they are 6.0k plus. Similarly their normal custom shop guitars have moved from 2.5k to just under 4.0k in two years. There's no way that can be justified, its greed pure and simple.

I don't have access to prices from two years ago, but there are still Custom Shop Fenders available in the £2.8k range. Based on inflation and the fall in the value of the pound, that's roughly correct. You need to make sure that you are comparing like for like. Plain vanilla/NOS guitars will always be the cheapest to buy, then once you add relicing, the prices start to go up. the more reliced, the longer it takes. And time is money. US labour rates aren't cheap and those of the master builders is going to be pretty high. Most stores these days tend to stock relics, which is what the market generally asks for, so the prices generally do look higher overall. But there are some Fenders from the standard production line that are now £500 short of the lower end of the Custom Shop line.

I'm not saying that all the high costs are justified, but accountants will use standard markup values on labour hours, so if a masterbuilder gets paid $40 an hour and works on a relic guitar for 40 hours, then that's a lot more than a normal CS builder at say $30 an hour who works on a standard finish guitar for 20 hours (values used just for example). then add on the markup and the price difference increases significantly.

There's a reasonable article in this months Guitarist on relicing at Gibson and Fender, and it does say that they are now both taking longer over the relic process to get it even more authentic. Longer = more costly.

In 2010, my wonderful wife bought me a Fender Custom Shop Dave Gilmour NOS Strat for £2,800 (and it's lovely). These days they seem retail for around £4000. But in the meantime, inflation has increased by 27% and the $ exchange rate has dropped from (roughly) 1.6$ to the pound, to 1.3$ to the pound. Factor those in, and you end up with an equivalent current value of £4370. So that particular guitar is now actually cheaper (given the circumstances) that it was. Even the highest price I can see for one is still £100 less than the adjusted value. So if Fender had just simply hiked all their CS prices by then 60% over two years, you'd be paying far more than that.

I think it's far more likely that you aren't properly comparing like for like, though there may be some exceptions.
User avatar
Wonks
Jedi Poster
Posts: 10690
Joined: Thu May 29, 2003 12:00 am
Location: Reading, UK
Correcting mistakes on the internet since 1853

Re: Fender busted for price fixing

Postby arkieboy » Mon Jan 27, 2020 12:52 am

Wonks wrote:In 2010, my wonderful wife bought me a Fender Custom Shop Dave Gilmour NOS Strat for £2,800 (and it's lovely)

Can confirm.
User avatar
arkieboy
Regular
Posts: 407
Joined: Thu Nov 07, 2002 1:00 am
Location: Oxfordish

Re: Fender busted for price fixing

Postby arkieboy » Mon Jan 27, 2020 1:00 am

I can also add whenever I've checked prices and followed through exchange rates, import tariffs and VAT, its pretty clear we're paying the same before tax as the US.

Yes its a bugger that we pay that huge slice on top of the raw price for the guitar, but have you seen what our US friends play for healthcare and the quality of their education system ... there are a few things more important than music, and there's two of them right off the bat.
User avatar
arkieboy
Regular
Posts: 407
Joined: Thu Nov 07, 2002 1:00 am
Location: Oxfordish

Re: Fender busted for price fixing

Postby Watchmaker » Mon Jan 27, 2020 2:58 am

arkieboy wrote:...what our US friends play for healthcare and the quality of their education system ...

<ahem>

What education?
User avatar
Watchmaker
Frequent Poster
Posts: 755
Joined: Wed Apr 13, 2016 12:00 am
Location: Upstate NY, USA
Take my advice, I'm not using it.

Re: Fender busted for price fixing

Postby Darren Lynch » Wed Jan 29, 2020 5:58 pm

One phrase which caught my eye was Fender's definition of itself as a 'lifestyle brand'.
As in "park that £6k Masterbuilt Relic in the corner of your front room to impress your friends".
Darren Lynch
Frequent Poster
Posts: 507
Joined: Tue Feb 25, 2003 1:00 am

Re: Fender busted for price fixing

Postby Darren Lynch » Wed Jan 29, 2020 6:01 pm

Wonks wrote:
rggillespie wrote:In 2010, my wonderful wife bought me a Fender Custom Shop Dave Gilmour NOS Strat for £2,800 (and it's lovely).

That's the best wife ever. The keepiest of keepers.
Darren Lynch
Frequent Poster
Posts: 507
Joined: Tue Feb 25, 2003 1:00 am

Re: Fender busted for price fixing

Postby Wonks » Wed Jan 29, 2020 6:51 pm

Don't worry, I've kept her! :D
User avatar
Wonks
Jedi Poster
Posts: 10690
Joined: Thu May 29, 2003 12:00 am
Location: Reading, UK
Correcting mistakes on the internet since 1853